Tag Archive: Master Class

Top 10 Insights From NACD’s Master Class in Fort Lauderdale

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Ashley Marchand OrmeNACD’s thought-leadership forum, Master Class, convened in Fort Lauderdale, Florida, late last year to discuss how corporate governance is adapting to the current operating environment. Dialogue among directors and session leaders at the event revealed 10 insightful takeaways:

  1. Board engagement in strategy development is a sign of healthy board-management engagement. The board’s role is to question the CEO’s strategy assumptions, offer alternatives, and ensure a long-term value creation. Senior management’s job is to execute the strategy.
  1. Given the complexity of today’s operating environment, it is even more important to stay attuned to disruptive competition in the company’s industry. Spend time outside of board meetings learning which changes—in technology, policy, or through stakeholder demands, for example—are emerging and how your company should address those disruptions.
  1. Demonstrate directors’ commitment to continued education in communications with shareholders, employees, and other stakeholders. While your board may feel that current director evaluations and education requirements are sufficient, review your director education program to ensure that board members’ skills are being enhanced to keep pace with the changing operating environment.
  1. Consider taking a few steps to enhance recruitment of and onboarding for new directors:
    • Consider not only the board’s recruitment needs in the next year, but also in the next several years as directors leave the board and as company strategy evolves.
    • Establish a requirement that the director pipeline includes candidates from diverse backgrounds.
    • Provide a welcome letter with job description to new board members.
    • Tailor new-director onboarding programs to individual directors.
    • Convey a sense of your board’s dynamics with each other and with management to both prospective and new directors.
  1. Determine whether the skillset matrix tests for skills that are necessary for the company strategy. While directors currently serving on the board may have had the skills to help the company achieve its prior strategy, realize that the directors sitting on the board today should be measured against the new ruler of current and future strategy expectations.
  1. Review your board’s bylaws and committee charters to determine whether the documents offer any detail about how directors oversee cultural risk. Probe management about culture. Given recent corporate scandals relating to unhealthy corporate culture, consider adding language to your bylaws and charters to demonstrate a commitment to healthy company culture. Take this commitment a step forward by probing management about how the company currently cultivates a healthy, ethical culture.
  1. Look beyond the information management has presented you to determine the company’s cultural dynamics among not only senior management, but also lower- and mid-level managers. Review online employee satisfaction websites to gauge morale and determine whether behaviors incentivized are realistic and healthy.
  1. Question the quality and volume of information being given to the board on enterprise risks. If the board is receiving 1,000 pages of information monthly about risks, ask whether the board can realistically absorb that information. Ask the chief risk officer to provide the board with a more brief and concentrated view of the risks that need to be addressed, and spend time drilling down on the most pertinent risks, including those that may be sleeping giants.
  1. When stumped on strategy, go back to the beginning. Ask often why the company was founded and what problem the company should help clients or consumers solve. Having a renewed vision of the founder’s mission can help provide fodder as to how to revive that vision in light of today’s operating environment.
  1. Dive deep into consumer trends and behaviors, when considering appropriate strategies. While it may be easy to become mired in the highly technical nature of directorship and oversight, realize that great insight can come from aligning company strategy so that it satisfies customers’ needs and wants.

Add your voice to the next critical conversation. View upcoming NACD Master Class dates.

Identify the Enemies of Effectiveness and Think Like an Activist: 5 Insights From a Philadelphia Master Class

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At the National Association of Corporate Directors’ (NACD’s) Master Class program in Philadelphia June 3-4, nearly 50 experienced directors engaged with corporate leaders on the key elements that will shape the boardroom in the coming decade.

NACD’s Master Class takes place over two days and comprises eight modules presented as panels, keynote speeches, and intensive breakout sessions. Modules are highly interactive and are led by veteran directors, leading business executives, and corporate governance experts. Each Master Class is organized around a specific theme.

In Philadelphia, discussions centered on ensuring effective boardroom dynamics and strengthening the board’s role in strategic planning, cybersecurity, and mitigating global risks. Below are five takeaways that emerged in Philadelphia.

  1. Search out the enemies of effectiveness. Vague expectations, absence of process, inadequate delegation of authority, and individual sabotage can individually or collectively compromise board effectiveness. Independent chairs and lead directors should be attentive to poor board dynamics, which often have root causes that can easily be addressed. Boards can also help counter dysfunction by establishing a foundation of shared principles that will guide the board’s decision-making, agenda-setting, discussion management, and self-assessment.
  1. Analyze the causes of gradual deterioration in performance. Management often rationalizes small performance drops by pointing to macro-economic trends or solvable business execution problems. Boards should consider adopting a forward-looking posture in order to understand the long-term impact of disruptors on business performance. They can do this by engaging with management in frequent discussions about the assumptions that undergird the company’s strategy and the “what-if” events that could invalidate those assumptions.
  1. Think like an activist shareholder. Activists usually know the industry and sometimes even the company better than the board does. To avoid being ambushed by well-informed activists, boards should learn from the consultants and investment banks that serve their company, industry, customers, and competitors. They must also challenge management’s conventional wisdom about the firm’s current performance and future direction.
  1. Clearly delineate the roles of the board and management in developing and executing strategy. Boards can offer more value by engaging “early and often” in the strategy development process, by pressure-testing management assumptions, and by selecting the appropriate metrics to assess strategy success or failure. When seeking a more active role, boards must collaborate with management on defining the boundary between directing strategy and managing it. Addressing this tension over where the lines should be drawn is a critical challenge that will demand ongoing attention from the CEO and the lead director.
  1. Anticipate the consequences of global disruptors. In a hyper-connected global marketplace, economic and political shifts in distant corners of the world can instantaneously impact company performance through supply-chain disruptions, foreign-exchange volatility, and regulatory activism. Boards can increase their understanding of emerging cross-border interdependencies and evaluate whether management is sufficiently agile to respond when conditions change.